Texas Instruments Incorporated (NASDAQ:TXN) shares plunged during the after-hours trading on Tuesday after the company posted a fourth-quarter earnings report that missed most analysts estimates. Shares of the company which declined by 5.2% to $113.55 during the after-hours trading were down by as much as seven percent during the trading session.
Earnings Report
Profits of the company declined by 67% during the fourth quarter to $344 million led by the charges caused by the new U.S. tax reform or overhaul. The revenue of the company was 10% higher to $3.75 billion for the quarter that ended in December which is higher than their revenue of $3.41 billion from the same quarter during the previous year.
During their previous quarterly earnings report, the company posted a net income of $1.29 billion or $1.26 per share beating most Wall Street estimates. Revenue of the company during the third quarter also rose to $4.12 billion on expectations of $3.91 billion.
According to Texas Instruments chief executive Richard Templeton, who will be leaving the company, the company’s revenue growth was due to the ongoing and stronger demand from the automotive and industrial businesses and sector. Texas Instruments chief operating officer Brian Crutcher is set to replace Templeton in June as chairman.
Weak Q1 2018 Outlook
The American semiconductor manufacturing company missed most Wall Street expectations for its quarterly earnings report for the first time in two years The company also provided a weak earnings forecast for their revenue on the current quarter.
While the revenue of the company has grown by almost ten percent during the fourth quarter, Texas Instruments that this growth is expected to slow down during the first quarter of the year by about four percent compared to the revenue growth of the company which ranged from 12% to 13% during the first couple quarters of 2017.
Texas Instruments expects profits of $1.01 per share to around $1.17 per share for the first quarter of 2018 while its revenue is expected to come at around $3.49 billion to $3.79 billion while analysts are expecting $1.15 per share in profits and $3.64 billion in sales.
For the current quarter, the company expects to benefit from the Republican tax reform on a long-term basis. The annual operating tax rate of the company is set to drop from 31% last year to 23% this year and a current ongoing rate of 18% in 2019.